The Financial Underbelly: Blackburn Rovers

Next up in our summer series is Phil Lloyd who initially got in touch to contribute an entry to our Great Football League Teams series back in 2012 but has since been forced by the continuing tenure of Venky’s at Ewood Park to restrict his missives to contemporary matters. Phil can be followed on twitter at @PhilLloyd6.

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It’s only a few short years ago that Blackburn Rovers were considered the model of a financially well-managed club. Maintaining a place feeding at the ever-voracious top table of English League football was no mean feat for a small, Northern town club with modest average gates and a catchment area limited not only by the other, parochial Lancashire towns that each boast their own team, but by the proximity of two Premier League giants in Manchester and another two in Liverpool.

Yet Chairman John Williams and Managing Director Tom Finn, aided by savvy managers like Mark Hughes and Sam Allardyce, succeeded for most of the noughties in keeping Rovers as a competitive force in the top division — and solvent, too. Solvency was aided by funds from the legacy of former owner Jack Walker, but the size of that annual boost to the bottom line would barely buy you a reserve full-back in the current transfer market.

What Williams and Finn did so well was to understand the realities of the market in which Blackburn was competing. They reasoned that an “unfashionable” club outside the main metropolises had to pay over the odds to attract players of sufficient calibre and so maintained a wages-to-turnover ratio that was higher than, say, Aston Villa or Everton might need to pay to achieve a similar Premier League placing. And, without too many flirtations with the relegation zone (lowest placing 15th in the years between 2001 and 2010), their policy worked.

So what has changed? Why are Blackburn Rovers currently reporting losses of over £42m, subject to a transfer embargo under FFP that seems unlikely to be lifted anytime soon, and consequently treading mid-table water in the Championship, rarely threatening to trouble the top six?

The answer lies in the aftermath of the sale of the club in 2010 by the Walker Trust to the Indian owners of Venkateshwara Hatcheries Private Limited, Venky’s for short.

The grand ambitions for their new “baby”, as stated by the Rao family members shortly after their acquisition, and the sharp contrast between them and the reality of club’s rapid decline and subsequent relegation to the Championship have been extensively documented, yet the real reasons are little understood even today.

The dismissal of Sam Allardyce, the fateful appointment of Steve Kean as his successor, the stripping out of the club’s management structure (including Williams and Finn), the alleged involvement of agents behind the scenes, and the total breakdown in meaningful communications between the owners and supporters, all played a part in the maelstrom that sent Rovers spinning downwards. Believing some Machiavellian involvement from people outside the club and distrusting distant owners who seemingly sought to manage it like a remote factory in their Indian chicken empire, many supporters walked away and cannot bring themselves to forgive and forget.

But what damaged the finances at Blackburn so badly was primarily a series of appalling decisions in terms of the playing staff and management.

On the playing side, lucrative contract extensions were handed to a number of senior players while others were recruited on expensive long-term deals that only served to help cripple Rovers financially. Danny Murphy, Dickson Etuhu and Leon Best were all reported to be on £30k+ a week, former Portugal striker Nuno Gomes arrived, along with a string of unknown Portuguese players, none of whom justified a fraction of the agents’ fees said to be involved in bringing them to Ewood.

The signings of the “Portuguese waiters”, as the fans quickly termed them, seemed to bear the hallmark of Shebby Singh, the Malaysian TV pundit brought in by Venky’s as “global adviser”. They, like Murphy, Etuhu and several other expensive misfits at Blackburn, ended up having to be paid off to terminate their contracts. At the time of writing, Leon Best waits to see if any other clubs are prepared to take him on loan while Rovers, unable to agree a severance deal, must continue to pay his wages for another year.

Financial mismanagement at Ewood has not been limited to dealings on the playing side. Manager Kean resigned, though many fans had wished him gone much sooner, later resuming his career in the footballing hotbed that is Brunei. Neither of his immediate successors, Henning Berg and Michael Appleton, managed to last as long as 70 days in the job, resulting in more payouts for contracts terminated and, in the case of Berg, a court case that further sullied the club’s name. Fortunately, Singh was quietly ousted from his role, adding to the litany of departures.

In the summer of 2014 the undistinguished Rovers career of David Goodwillie was also ended, as was that of Spaniard Ruben Rochina, who had at least shone intermittently following his unusual transfer from Barcelona, which saw a fee of £400,000 paid to his club and four times that figure allegedly paid to his agent.

In the past season, Rovers have still been paying high earners Paul Robinson (7 League appearances), David Dunn (9) and most of the wages of Leon Best (zero appearances for Blackburn, a handful on loan for both Derby and Brighton, no goals for anyone). The former two have left the club this summer. Added to these, a deal was reached to end Jordan Slew’s contract in January this year and the unhappy association of Bradley Orr with the club was finally terminated in March.

In short, Rovers under Gary Bowyer have done a great deal to reduce their wage bill, though the biggest earner at the club, striker Jordan Rhodes (another Shebby Singh “deal”) remains on the payroll. Rhodes has scored at the rate of a goal ever other game for Blackburn and, while most Rovers fans would agree his salary is excessive given the club’s financial predicament, they worry how his goals would be replaced were he to leave. Fortunately, so do the owners, as far as one can read into their actions.

So, how can Blackburn Rovers look forward to the season ahead?

I am not the first, nor will I be the last, to observe that FFP, even the version of it that is applied (unevenly, it would seem from the outside) to Championship clubs, works against the interests and aspirations of clubs like Blackburn with a relatively limited income potential. Unlike its supporters, however, the club deserves little sympathy for their present predicament. It has frittered away most of the parachute payments since the team dropped out of the Premier League, perhaps through misguided and naà¯ve ownership and governance, but certainly through a raft of poor business decisions. Worse still, it has effectively disenfranchised a significant proportion of their customer base. Those supporters that remain are largely pessimistic and still frustrated at the lack of a proper management structure at Ewood Park. Communications are still inadequate, compared with what a supporter might reasonably expect, and it seems virtually all significant decisions still need to be referred to India: not, you would think, the ideal way to run a modern, progressive business.

The expectations are for at least another season under the transfer embargo, while further frantic efforts are made to cut costs, improve income and make the club’s profit and loss account begin to approach what is needed to have the ban lifted. Few expect Rovers to be back on board the Premier League gravy train anytime soon.

On the field, Gary Bowyer will continue to profess that Rovers are “giving it a right good go”, while the evidence in terms of performances and results may too often suggest a different story. More positively, younger players such as David Raya, Adam Henley, John O’Sullivan, Darragh Lenihan and Josh Morris may be given more chances to prove themselves, and to justify the investment that the owners have thankfully continued to make in the club’s Academy.

As for the past three seasons, Jordan Rhodes will probably score 20+ League goals for Blackburn. But it will almost certainly be a season when the owners will need to underwrite further trading losses. And during which the fans will continue to fear what would happen next should Venky’s decide to stop feeding their baby.